This year until 31St In December 2021, Buckingham Group Contracting saw turnover rise 14% to a new high of £665m, up from £584.5m in 2020 and £485.7m in 2019.
But while it made a pre-tax profit of around £10m and £8m in 2019 and 2020, this fell in 2021 to a pre-tax loss of £10.7m.
On the plus side, it still had zero gearing and £77m of cash in the bank at the end of the year.
The loss was attributed to a £14.2m shortfall on a single major stadium contract – reportedly the new Riverside Stand at Fulham Football Club’s Craven Cottage ground – of which more than half the loss was due to “the very significant cost impact caused by the financial failure of a large and critical subcontractor”. This supplier eventually went into voluntary liquidation in February 2022.
Buckingham also struggled in 2021 with year two of the covid pandemic. The annual report states: “Although the company’s on-site procedures had been very successfully and safely adapted throughout 2020 to deal with the covid challenge, the third lockdown period that followed similar restrictions in November and December 2020 had a more severe impact on resource availability . .
“This was not only while the lockdowns were in place, but also following the lifting of restrictions and the expanded vaccination programme, when levels of construction activity in the UK increased. Material supply tightened further and there was a marked deterioration in the ability of our specialist subcontractors to secure internal trades such as mechanical and electrical fitters, and partition and cladding operators These activities have historically relied to some extent on mobile specialist workers operating across the UK.
“The pandemic also triggered a reduction in the available workforce, with ONS evidence suggesting that many European construction workers did not return to the UK after the 2020 Christmas holidays. Furthermore, traveling crews were particularly vulnerable to transmission of the more virulent ‘Kent variant’ strain of covid in early 2021, and the ‘Omicrom variant’ later in the year.
In parallel, material supply was also significantly disrupted throughout 2021, with supply shortages leading to sharp price increases and delayed delivery of many products throughout the year.”
Chairman Mike Kempley said: ”As we reflect on 2021, the single most important event for the company was the execution of a well-planned transition to employee ownership. [See Buckingham Group sold to employee trust.]
While this form of share transfer enabled a seamless transition for our key stakeholders, the carefully planned change marked a significant watershed in the evolving ownership of Buckingham.
”Sales of £665 million in 2021 represent a new record high for the company with 14% annual growth from 2020. Measured over the past three years, annual growth is 9.5%, at the upper end of the board’s medium-term target. . This increase in sales, which is due to be repeated in 2022, before exceeding £700m turnover in 2023, provides further evidence of the strength and depth of Buckingham. The determination of our employees and managers, combined with the diverse range of operations and our regular corporate customers, has underpinned this continued organic growth. From the start of the business, this has been achieved without any mergers or acquisitions.
Highlighting strong underlying earnings development, the board can report a pre-adjusted 1.8% profit margin in 2021 reflecting excellent delivery and positive commercial results across all but one of Buckingham’s primary operating sectors. A combination of covid-19 cost impacts across the business and a significant exceptional loss in 2021 on a major stadium contract have unfortunately weakened overall performance. Alongside significant changes in customers, the failure of a major subcontractor in February 2022 was a significant factor in the commercial performance of this one major project, which was priced and planned pre-pandemic.”
He concluded: “There is no denying that we are disappointed with the 2021 result, which is only the second annual pre-tax loss in the last 22 years of trading, leaving a net loss of £7.6m after tax. But putting this into perspective, the unexpected and uncharacteristic loss follows five consecutive years of positive trading results, which collectively produced a pre-tax profit of £57m.”
The one-off costs for the transition to EOT ownership amounted to £1.0m in 2021, including “for a bonus payment for the celebration staff”.